Like the Incredible Hulk, dividends are a force to be reckoned with.

If you ask me, there is no better way to quickly determine the overall attractiveness of a stock than by checking out its dividend. Dividends can give you a sense of whether a company is really making money, whether its stock is reasonably valued, and how management views shareholders. All in all, it's a pretty mighty number.

And while most investors are very familiar with dividend royalty like Abbott Laboratories (NYSE:ABT) and PepsiCo (NYSE:PEP), there are also plenty of good dividend-paying companies that are small enough to fly under Wall Street's radar. And many of these undercover dividend payers offer higher dividend payouts, better growth, or both.

To uncover some of these small dividend dynamos, I turned to the Motley Fool CAPS community, looking specifically for companies with a market cap below $5 billion and a dividend yield above 2.5%.

Company

Market Cap

Dividend Yield

CAPS Rating
(out of 5)

Ares Capital Corp.

$1.3 billion

11.6%

***

Himax Technologies (NASDAQ:HIMX)

$541 million

9.5%

*****

MVC Capital (NYSE:MVC)

$278 million

4.2%

*****

Christopher & Banks

$235 million

3.7%

**

Windstream (NYSE:WIN)

$4.4 billion

9.8%

****

Source: CAPS and Yahoo! Finance.

While the stocks above are all small and dividend-paying, it's apparent by their star ratings that the CAPS community doesn't think they're all worth your investment dollars. They could all be worth researching further, though, and to get you started, let's take a closer look at MVC Capital.

The business
When it comes to finance big shots that make their money buying and selling companies, most investors are probably a lot more familiar with hulks like Goldman Sachs (NYSE:GS), Blackstone (NYSE:BX), and KKR than they are with little ol' MVC. But the team at MVC brings some serious finance background to the table -- not least among them is Michael Tokarz, MVC's portfolio manager and a former general partner at KKR.

While the scale may be smaller, the business at MVC is very similar to that at the larger finance firms. The company makes both debt and equity investments in other businesses and hopes to eventually realize gains on its interests.

MVC has invested in a variety of businesses, ranging from apparel maker BP Clothing (the company behind the Baby Phat brand) to pipe-fitting manufacturer Custom Alloy.

The dividend
We run into a few issues when considering MVC's dividend. First, we don't have a terribly long history to go on. Though the company that's now MVC was originally founded in 1999, it wasn't until the end of 2003 that Tokarz and company took over and applied their specific investment framework to the portfolio.

Further, MVC's portfolio isn't particularly income-oriented. This means that the company has to rely on favorable sales of its investments to fund at least part of the dividend. This part of MVC's returns has had significant peaks and valleys. In its 2007 fiscal year it reported nearly $67 million in realized investment gains, then bagged just $1.4 million in 2008. This past fiscal year, the company actually recognized realized investment losses of $25 million.

What investors need to rely on here are two things: First, that MVC's management team is continuing to make savvy investments, and second, that it is accurately valuing the stakes that it holds.

During the past two years, when realized gains have been slim, the company has reported big unrealized gains on its investments. If these markups are accurate, it means that the company should have some gains that it can cash in on in the coming years. And those gains could hopefully fuel a steady, if not growing, payout for shareholders.

If the gains that management hopes to recognize aren't there, though, MVC may have to either rethink its dividend or raise money by selling new shares, which would be like pulling money from one pocket and putting it into the other.

CAPS members sound off
Nearly 1,000 CAPS members have weighed in on MVC; 963 of them have rated the company's stock an outperformer. Many of the MVC bulls have taken a view similar to CAPS All-Star SkepticalOx's; this player gave the stock a thumbs-up in September and said: "With the stock currently trading in the $9 range, it's at a serious discount to the NAV of $16.50 per share at the end of August..."

SkepticalOx is referring to the company's net asset value -- a measure that's equivalent to shareholder equity. For a company like MVC, NAV should normally be a fairly good approximation of what the company is worth, since investments are supposedly marked to fair value.

This, of course, brings us back to what I noted above; we need to trust that management has been accurately valuing what MVC owns. Considering that the company's year-end NAV was $17.47, and the stock currently trades at $11.45, it's obvious that investors have their doubts. But for those betting with MVC, if the rest of the market is wrong, there could be some very solid gains for the taking, not to mention continued dividend payments.

Your turn
Think these dividend payers have what it takes to be top-notch investments? Head over to CAPS and share your thoughts on the prospects for MVC or any of the other companies listed above.

MVC may be a good investment opportunity, but my fellow Fool Tim Hanson believes he's found the biggest investment opportunity of the year.

PepsiCo is a Motley Fool Income Investor recommendation. The Fool owns shares of MVC Capital. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Matt Koppenheffer owns shares of Blackstone, but does not own shares of any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants ...